Unfortunately, these are times when many people are faced with a potential foreclosure of their home. The way the system is set up, the banks essentially do everything and you, as the homeowner, don’t really have to do anything. However, it will help your peace of mind to know how it all works and what it means to you.

The Basics:

Whenever a borrower fails to pay their mortgage, the bank has the right to repossess the collateral (i.e. foreclose on the property). In Arizona, there are two ways to “foreclose”:

1. Judicial Foreclosure: In order to do a judicial foreclosure the bank has to file a law suit. Because there is an alternative available for banks in this state, almost no residential foreclosures are done this way.

2. Trustee’s Sale: Virtually all home foreclosures in Arizona are done by way of Trustee’s Sale. For a trustee’s sale, all the bank has to do is give the homeowner 90 days notice. This is accomplished by sending a a Notice of Trustee’s Sale to the homeowner and recording it with the County Recorder’s Office. On this Notice, you will find the exact time and date that has been set for the auction – approximately 90 days in the future. The only way to stop the Trustee’s Sale from taking place (assuming the bank is not willing to work with you in any way) is to pay the full amount owed before 5:00 PM the last business day BEFORE the sale.

 Why you should talk to an attorney on how this can affect you?

 This is likely a very stressful and emotional time for you and you likely have questions about what happens after the foreclosure. There are a couple of statutes in Arizona that determine whether the bank can pursue you for a deficiency (the difference between the amount owed on the mortgage, and the amount the property was sold for at auction). The determination is very fact-driven and to understand how it can affect you, you should speak to an attorney about your specific circumstances.